FOWLER v. WILL.

[19 S. Dak. 131, 102 N. W. 598.]

QUITCLAIM DEED, Effect of as Against Prior Unrecorded Warranty Deed. An unrecorded warranty deed has precedence over a subsequently executed and recorded quitclaim deed purporting to remise, release, and quitclaim the grantor's interest in the premises. (p. 940.)

A. E. Hitchcock, for the plaintiff.

C. W. McDonald and R. H. Null, for the defendant.

131 FULLER, J. This action to determine conflicting claims to real property resulted in a judgment quieting title in the defendant 182 H. P. Will, subject to a lien for certain taxes in favor of plaintiff, and both parties have appealed.

In the absence of a brief or oral argument on the part of the defendant H. P. Will, the only question is whether the trial court erred in holding an unrecorded warranty deed valid and effectual as against a recorded quitclaim deed executed later by the same grantor, and which purports only to "remise, release, and quitclaim" his interest in the premises. Speaking of such an instrument in Parker v. Randolph, 5 S. Dak. 549, 59 N. W. 722, 29 L. R. A. 33, we say: "The record was therefore sufficient to put the defendant Lane on inquiry, as a grantee in a quitclaim deed is not a bona fide purchaser. Such deed simply conveys all the interest, if any, which the grantor has in equity at the time of its execution." Under our recording act, a subsequent purchaser in good faith, whose conveyance is first duly recorded, has authority to question the validity and destroy the effect of a warranty deed previously executed by a common grantor; but a quitclaim deed in no sense purports to convey title-not even by inference and is not essentially a grant, in contemplation of the statute: Rev. Civ. Code, 1903, sec. 986. In Winkler v. Miller, 54 Iowa, 476, 6 N. W. 698, the view of the court is thus expressed: "Where a person purchases of another who is willing to give only a quitclaim deed, he may properly enough be regarded as bound to inquire and ascertain, at his peril, what outstanding equities exist, if any. His grantor virtually declares to him that he will not warrant the title. even as against himself, and it may be presumed that the purchase price is fixed accordingly." From the case of

Peters v. Carter, 80 Mich. 124, 20 Am. St. Rep. 508, 45 N. W. 73, we quote approvingly in Parker v. Randolph, 133 5 S. Dak. 549, 59 N. W. 722, 29 L. R. A. 33, as follows: "Under the cloak of quitclaim deeds, schemers and speculators close their eyes to honest and reasonable inquiries, and traffic in apparent imperfections in titles. The usual methods of conveying a good title-one in which the grantor has confidence is by warranty deed. The usual method of conveying a doubtful title is by a quitclaim deed. The rule is wise and wholesome which holds that those who take by quitclaim deed are not bona fide purchasers, and take only the interest which grantors had. This rule is adopted in the United States supreme court and in the courts of many of the states. It is therefore immaterial whether Cartier had notice or knowledge of complainants' title. He must be held to have purchased at his own risk, and Douville, having no title, conveyed none to him." To the effect that persors taking by quitclaim deed are not bona fide purchasers without notice, the authorities are numerous and convincing. Thorn v. Newson, 64 Tex. 161, 53 Am. Rep. 747, is an authority to the point that one taking a quitclaim deed is not protected by the recording act, as a bona fide purchaser, and the court say: "While nonregistered deeds are declared void by the statute as to subsequent purchasers for value and without notice, still the doctrine is well settled that a subsequent purchaser, although for value and without actual notice, who takes under strictly a quitclaim deed-that is, one by which the chance of title, and not the land itself, is conveyed-will not be accorded the protection of the statute, for the obvious reason that he contracted for the interest only that his vendor then had in the land. If the vendor had previously devested himself of the title to a portion or all of the land, to the extent of the divestiture there would be no right remaining in the vendor to pass 134 by the quitclaim to the vendee. It is, then, the interest of the vendor for which he contracts, and it is to such interest only that he is entitled under the quitclaim deed." In Bayer v. Cocherill, 3 Kan. 282, where a deed "remised, released, and quitclaimed" certain real estate, portions of which the grantor had previously sold to a third person, but for which no deed had been delivered, it was held that the conveyance was nothing more than a quitclaim, and that only the actual interest which the grantor had at the time was conveyed. The author of the article on

"Deeds," 13 Cyclopedia, 527, says: "There should be some title or interest, in law or equity, in the grantor, to enable him to convey, and the grantees, under a release or quitclaim, will take nothing, where the grantor has no interest which he can convey." Reed v. Knights, 87 Me. 181, 32 Atl. 870, is a case substantially the same as this, and the court say: "But defendant read in evidence a quitclaim deed from plaintiff's grantor dated in 1881, claimed to cover the locus in dispute. Suppose it did. Plaintiff's grantor had previously conveyed the same to plaintiff in 1875 by warranty deed, recorded in 1893, and defendant's quitclaim therefore passed no title to him, for the grantor had none to part with; and the fact that plaintiff's deed was not recorded makes no difference."

For further cases holding that a quitclaim deed comprehends no more than is actually owned by the party executing it, and, as to interest already gone, is of no effect, see Steele & Son v. Sioux Valley Bank, 79 Iowa, 339, 18 Am. St. Rep. 370, 44 N. W. 564, 7 L. R. A. 524; Benton v. Sentell, 50 La. Ann. 869, 20 South. 297; Gest v. Packwood (C. C.), 34 Fed. 368, 13 Saw. 202; Johnson v. Williams, 37 Kan. 179, 1 Am. St. Rep. 243, 14 Pac. 537; Arlington Mill & Elevator Co. v. Yates, 57 135 Neb. 286, 77 N. W. 677. Although the granting clause in the deed construed by this court in the case of State v. Kemmerer, 14 S. Dak. 169, 84 N. W. 771, recites that defendants "do convey, grant, remise, release, and quitclaim all their right, title, estate, interest, property, and equity in and to the following described property," it was held that such instrument did not pass the after-acquired title of the grantor.

Plaintiff, not being entitled to the protection afforded by the registration act, took nothing by the quitclaim deed executed long after the premises had been disposed of by warranty deed, and the judgment of the lower court is affirmed.

Corson, Presiding Judge, Dissented, maintaining that in no prior decision had the court. committed itself to the doctrine upheld by the majority in opinion in the case, and that it was contrary to the decisions of the supreme court of the United States and of other national courts, citing Moelle v. Sherwood, 148 U. S. 21, 13 Sup. Ct. Rep. 426, 37 L. ed. 350; United States v. California & O. L. Co., 148 U. S. 31, 13 Sup. Ct. Rep. 458, 37 L. ed. 354; Boynton v. Haggarty, 120 Fed. 819, 57 C. C. A. 301.

The Operation and Effect of Quitclaim Deeds are discussed in the note to Babcock v. Wells, 85 Am. St. Rep. 854. Such deeds are not an assertion of title of any particular, or of any, title, and do not of themselves operate as an estoppel against either grantor or grantee as to the nature or extent of the title: Olmstead v. Tracy, 145 Mich. 299, 116 Am. St. Rep. 299.

IOWA NATIONAL BANK v. SHERMAN.

[19 S. Dak. 238, 103 N. W. 19.]

JURY TRIAL-Witnesses, Right to Disregard Testimony of.A jury may disregard, as not entitled to credit, the uncorroborated testimony of interested witnesses where the circumstances are such as to reasonably allow of suspicion. (p. 943.)

JURY TRIAL-Interested Witnesses, Right of Jury to Pass Upon Credibility of Though They are Uncontradicted.—Where a bank sues on a promissory note on which its right to recover depends upon its being a bona fide and innocent holder, and it appears that the president and cashier of the bank are officers and stockholders of the corporation which transferred the note, and that it was discounted by the bank without inquiry, the proceeds being placed to the credit of the transferring corporation against which there was a large overdraft, the question whether the plaintiff was a bona fide purchaser should be submitted to the jury, though the testimony of its president and cashier to that effect is not contradicted by other witnesses. (p. 944.)

J. Kirby, for the appellants.

Boyce & Warren, for the respondent.

238 FULLER, J. The facts in this case, now before us on rehearing, are stated in 17 S. Dak. 396, 106 Am. St. Rep. 778, 97 N. W. 12, where it appears 239 that the action is upon a promissory note executed by appellants to the Janney Manufacturing Company, and transferred to the respondent bank, before maturity, in the due course of business. As a complete defense appellants pleaded the breach of an express warranty, failure of consideration, and fraudu lent representations as to certain farm machinery in settlement for which the note was executed, and the last two paragraphs of the answer are as follows: "That the said Janney Manufacturing Company, at the time it entered into said contract with these defendants, knew that said' machines were defective, and not suited for the purpose for which they were manufactured, but wrongfully and fraudulently, and for the

purpose of defrauding these defendants, did make such representations and statements, and thereby induced these defendants to execute to it their note as aforesaid; that said plaintiff had full knowledge at all times that said note had been obtained from these defendants by fraud and without consideration therefor; that the alleged consideration therefor had wholly failed; and that, if the plaintiff has said note, it has the same only as the agent of the said Janney Manufacturing Company, and as parties to said fraudulent transactions, and for the further purpose of harassing these defendants and enable the said Janney Manufacturing Company to better carry out the purpose of its fraudulent design." Upon the theory that respondent is a bona fide purchaser of the note for value, and before maturity, as shown by the uncontroverted testimony of its president and cashier, the trial court directed a verdict in its favor for the full amount claimed. In appellants' former brief there is a cursory statement to the effect that the case should have gone to the jury on account of the interest of such 240 witnesses in the result of the action, but the point was not argued by counsel, and we failed to consider the same as thoroughly as some other questions more confidently relied upon for a reversal. Now, all the testimony relative to this vital issue of bona fides was adduced by interested bank officials, and the fact that its cashier was a stockholder and secretary of the Janney Manufacturing Company, and its president the manager of the fiscal affairs of such corporation, acting in the capacity of treasurer, director, and stockholder, when considered with the other circumstances in the case, might be sufficient to justify the jury in discreditng their testimony on the ground of interest, and in that event the evidence offered by appellants and rejected by the court would constitute a complete defense. According to the daily custom of these closely related corporations, this note, duly indorsed, was presented to the teller of the bank, who discounted the same without any inquiry, and placed the proceeds thereof to the credit of the Janney Manufacturing Company, against which at that time there was an overdraft of nearly fifteen thousand dollars. Respondent's ownership of the note and the obligation of the Janney Manufacturing Company, as an unrestricted indorser, creates a mutual interest, which in case of failure to collect would result in material loss either to the bank, of which the witnesses are managing officers, or to the manu